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In our opinion, no. You’ve no doubt read stories about prices rising over the past few months, so you might be forgiven for assuming this means the worst of the housing market downturn is over and we’re getting back to business as usual. We don’t think that’s true. The most important thing to understand about this situation is that the behaviour of the property market over the past decade was anything but ‘business as usual’ – so it’s foolish to expect a return to the days of sustained 10% or even 5% annual house price rises. It’s insane that anybody even thinks that’s a desirable situation. If the average cost of a home increases at a rate that...

According to the British Bankers Association, the number of mortgages approved by major banks rose in February for the third consecutive month. Happy days are here again! Not quite, despite the rise, mortgages approvals are still close to historic lows and down over 30% on the same period for last year, so we’re not out of the woods yet. Low interest rates and falling property prices may have tempted some cash-rich bargain hunters back into the market to buy houses at what they believe to be once-in-a-lifetime knock-down prices, but the bulk of the market is still frozen solid. Most importantly of all, first time buyer mortgages are still extremely hard to get hold of, and as everybody...

The Financial Services Authority says it will place a cap on mortgages to prevent people from borrowing more than the traditional multiple of three times their annual salary, in order to stop the kind of lunacy we saw at the peak of the property boom when people were able to obtain mortgages of up to six times their yearly earnings. The newly emboldened regulator also says it’s going to put a stop to 100% mortgages – although that’s kind of a moot point since the banks have already figured that one out for themselves, these days it’s almost impossible to get a mortgage without a 5% deposit at the very least. While the FSA might be feeling a...

Remember that 0.5% emergency interest rate cut last week? The one that was supposed to bring a bit of relief to homeowners and maybe get the mortgage market moving again? Remember that? We only ask because it looks like some of the big mortgage lenders certainly don’t remember it. The Nationwide announced today that it was increasing the interest rate of its tracker mortgages by as much as 0.3% and making it even harder for first time buyers to get a mortgage. Northern Rock, which as we all know is now owned by the same government which recently berated lenders for not passing on interest rate cuts to its customers, is only going to cut its standard variable...

To the surprise of nobody with more than a couple of economics brain cells to rub together, the bail-out / conservatorship / nationalisation by any other name of the US GSEs Fannie Mae and Freddie Mac offered only a temporary reprieve to the markets. Temporary, in this instance, meaning less than 48 hours. The initial misplaced euphoria from unthinking investors (and I’m deliberately excluding those canny enough to ride the index spike up and short it back down again) quickly gave way to the realisation that this act – though probably unavoidable in the grand scheme of the current crisis – does not represent the beginnings of a return to a stable world financial system. On the contrary: it highlights the mess we’re in. Think about it. The two entities that between them guarantee the mortgages of 50% of the US housing market are now effectively being supported and funded by US tax-payers....